Hedge Funds Are Cashing Out Of Adverum Biotechnologies, Inc. (ADVM)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Adverum Biotechnologies, Inc. (NASDAQ:ADVM) based on those filings.

Is Adverum Biotechnologies, Inc. (NASDAQ:ADVM) a healthy stock for your portfolio? Investors who are in the know were becoming less hopeful. The number of long hedge fund bets went down by 5 lately. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that ADVM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most investors, hedge funds are perceived as underperforming, old investment tools of the past. While there are greater than 8000 funds trading today, Our experts look at the top tier of this group, around 850 funds. These hedge fund managers command the lion’s share of the smart money’s total asset base, and by paying attention to their matchless investments, Insider Monkey has discovered a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to view the fresh hedge fund action regarding Adverum Biotechnologies, Inc. (NASDAQ:ADVM).

Do Hedge Funds Think ADVM Is A Good Stock To Buy Now?

At the end of March, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in ADVM a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Adverum Biotechnologies, Inc. (NASDAQ:ADVM) was held by RA Capital Management, which reported holding $92.3 million worth of stock at the end of December. It was followed by Avoro Capital Advisors (venBio Select Advisor) with a $78.9 million position. Other investors bullish on the company included Sonic Capital, OrbiMed Advisors, and Deerfield Management. In terms of the portfolio weights assigned to each position Sonic Capital allocated the biggest weight to Adverum Biotechnologies, Inc. (NASDAQ:ADVM), around 26.69% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, setting aside 1.39 percent of its 13F equity portfolio to ADVM.

Judging by the fact that Adverum Biotechnologies, Inc. (NASDAQ:ADVM) has experienced falling interest from hedge fund managers, we can see that there was a specific group of hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $3.9 million in stock, and Jeffrey Diehl’s Adams Street Partners was right behind this move, as the fund dumped about $1.3 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Adverum Biotechnologies, Inc. (NASDAQ:ADVM). We will take a look at Kopin Corporation (NASDAQ:KOPN), OrthoPediatrics Corp. (NASDAQ:KIDS), Ready Capital Corporation (NYSE:RC), Bain Capital Specialty Finance, Inc. (NYSE:BCSF), Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), Sprott Inc. (NYSE:SII), and Preferred Bank (NASDAQ:PFBC). This group of stocks’ market caps match ADVM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KOPN 11 12726 5
KIDS 8 37342 -4
RC 10 43835 2
BCSF 10 31960 -2
GLDD 16 120684 0
SII 11 139612 -6
PFBC 9 28320 -5
Average 10.7 59211 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $396 million in ADVM’s case. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the most popular stock in this table. On the other hand OrthoPediatrics Corp. (NASDAQ:KIDS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is more popular among hedge funds. Our overall hedge fund sentiment score for ADVM is 72. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately ADVM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADVM were disappointed as the stock returned -68.7% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.